Several years ago the cGMP-stimulated cyclic nucleotide phosphodiesterase (PDE) was purified from calf liver. We now report that kinetics of cAMP hydrolysis by this PDE are best described according to the rate equation for a two-site competitive model for allosteric enzymes. According to this model, the PDE exists in two conformations, a "high" and "low" affinity state; binding of substrate (S), effectors (E), or certain competitive inhibitors (I) to the "low affinity" state induces allosteric transitions to the "high affinity" state. This model also accounts for earlier data which indicated that certain I (i.e., IBMX, papaverine, dipyridamole) could apparently mimic S, bind to the low affinity state, induce allosteric transitions to the "high affinity" state and reduce napp, and stimulate hydrolysis of low S. At high S, I competes with S at catalytic sites. Equilibrium binding constants for S and a number of I of the methylxanthine type to high and low affinity states were estimated. Our findings suggest that although a number of derivatives bound to the "low affinity" state as well as S, only two were nearly as effective as S in binding to the "high affinity" state. Thus, structural determinants and requirements are more stringent for binding to the high than to the low affinity state. During allosteric transitions, the topography of specific hydrophobic domains of the enzyme may be altered. Both temperature and pH alter catalytic activity as well as allosteric transitions. Low temperature (5 degrees C) promotes transitions to the high affinity state, as does incubation at (30 degrees C) at high pH (9.5-10) in the presence of MgC12 MgC12. These data indicate that the enzyme possesses independently regulated regulatory and catalytic sites with discrete topographical features and that allosteric transitions involve alterations in affinity for S rather than in Vmax.